1. Select a Type of Business Ownership Section 2

2. An Existing Business Advantages of an Existing Business –_________ has customer base, suppliers, and producers –Seller of a business may ______ the new owner –Prior ________ of revenues, expenses, and profits –Financial Arrangement can be ______ May give better terms than a bank

3. An Existing Business Disadvantages of an Existing Business –Not making a _______ –Inherited _________ Bad reputation Poor location –________ is required Many entrepreneurs may not have the money

4. Family Business Approx. 90% of businesses are owned by _________ –Even Ford is still held largely by family members Advantages of family businesses –Efforts are ___________ by those they care about –_______ working with relatives/keep memories alive

5. Family Business Disadvantages of Family Businesses –___________- hiring because of family status regardless of ability Can mean _______ business decisions are made –Family ___________

6. Franchise Franchise- ________ agreement that gives an individual the ______ to market a company ’ s products or services in a particular area –___________- the person who purchases a franchise –___________- person or company who offers a franchise for purchase –More than ___________ people own franchises

7. Franchise _____________ Costs of a Franchise –Initial ______________ Fee Fee the franchise owner pays in return for the right to run the franchise –____________________ Costs associated with beginning a business –____________ Fees Weekly or monthly payments made by the owner to the seller –Usually a % of your franchise income –Advertising Fees Fees paid to support television, magazine and other __________

8. Franchise Advantages of a Franchise –Entrepreneur is provided with an _____________ product or service –Franchisors offer management, technical, and other ____________ –Equipment and supplies can be ____ _________ –Guarantee of ______________ attracts customers Franchises mandates a certain level of quality

9. Franchise Disadvantages of a Franchise –Can cost a lot of ______ and cut down on profits –Owners have _____ ___________ to make decisions than other entrepreneurs –Franchisees are ___________ on the performance of other franchises in the chain –The franchisor can ___________ the franchise agreement

10. Franchise Evaluate a Franchise –What is the ___________ Will I get _________ territory –What are the ______ and royalty fees associated with the franchise –How __________ have other franchises in the area been? What do other franchisees think of the franchisor? –What ________ are provided by the franchisor –___________the franchise relationship

11. Non-ProfItNon-ProfIt Focus on _________Rath er than __________ All revenue is __________ in the company Advantages Special _____ Exemptions Qualify for certain _______ ________ Liability Disadvantages ______ – the time, effort, and cost to set up is lengthy ___________– for tax exemptions/grants _________ Control Board of Directors Finances are public

12. Legal Form of Your Business Sole ______________ –_____ person is in control of all business aspects –Advantages Gov ’ t exercises _____ ________ over your actions Not as many _____ to fill out –Disadvantages Can be difficult to raise _________ Private assets may be _______ to pay what is owed.

13. Legal Form of Your Business ________________ –Go into business with more than one person. ________ decision-making and management responsibilities –Advantages ____ coming up with ________ Shared ________ Face ________ gov ’ t regulations –Disadvantages Don ’ t want to share _________ Legally _____ for errors of partners ________ decision making

14. Legal Form of Your Business ______________- treated _____________ of its owners. The corporation, not the owners pays taxes, enters into contracts, and held liable for negligence Share of ______- ownership in a corporation. Owners are called shareholders. –Private vs. public Board of Directors- group of people who meet several times a year to make important _________ affecting the company. Electing company officers, salaries, corporate rules –Day to day operations are left up to the _________ ___________ Dividends- ________ distributed to shareholders by corporations.

15. Legal Forms of Your Business Advantages of a Corporation –The corporation is _____ not the individual people –Can raise more money through ______ more stock Lenders may be more willing to lend –Main shareholders can __________ without disrupting day to day operations Disadvantages of a Corporation –____________ to set up Need a ______ and file _______ of ____________ Must disclose all activities of a business and will be limited to those activities alone –Income is taxed _______ Corporation pays tax on _________ Shareholders pay taxes on __________

16. ___ Corporation –Taxed like a partnership –Individuals are taxed on the profit they make –Good for businesses starting out as they tend to lose money the first few years.